Vermont's governor, attorney general, and state financial regulators detailed a complex investment fraud scheme they said was carried out by a pair of real estate developers, one of whom is accused of using investors' money to pay his personal taxes and to purchase a luxury condo in New York City.

"This is obviously a difficult day for Vermont," Democratic Gov. Peter Shumlin said. "And for many people, myself included, who are so invested in growing jobs and economic opportunity in the Northeast Kingdom."

The promises from developers Ariel Quiros and Bill Stenger would've transformed Vermont's rural, job-hungry Northeast Kingdom. They have laid out ambitious plans for a new biotech research facility and modern downtown revitalization for Newport, on top of massive upgrades to the Jay Peak and Burke Mountain resorts.

However, regulators alleged some of the investment money instead funded Quiros's $2 million luxury condo purchase in Trump Place in Manhattan, enabled his personal investments including the purchase of Jay Peak, and was a source of funds for him to pay his own taxes.

Shumlin revealed the state, along with the federal Securities and Exchange Commission, filed separate civil lawsuits against the businessmen, with the SEC freezing the assets of the businessmen, including the ski resorts.

"This is what we allege fraud looks like," Susan Donegan, Vermont's top financial regulator, said, pointing to a chart resembling a bowl of spaghetti to illustrate Donegan’s accusation that the developers funneled money between various accounts.

Donegan described Stenger and Quiros of running a complex, "Ponzi-like" scheme starting in 2008.

According to court papers, the pair took in some $350 million from foreign investors through the federal job-creation incentive program known as EB-5. It enables foreign investors to get on a path toward legal, permanent U.S. residency by investing in projects that result in the creation of jobs in rural America.

"The alleged fraud ran the gamut from false statements to deceptive financial transactions to outright theft," Director of the SEC's Division of Enforcement Andrew Ceresney said. "As alleged in our complaint, the defendants diverted millions of EB-5 investor dollars to their own pockets, leaving little money for construction of the research facility investors were told would be built and thereby putting the investors' funds and their immigration petitions in jeopardy."

A civil court filing obtained by necn accuses Stenger and Quiros of shuffling the money between at least 100 accounts, disguising $50 million in personal spending by accused mastermind Quiros, and the pair's misuse of another $200 million to cover old debts and new acquisitions not disclosed to investors.

"The defendants, if found liable, will face no jail time," Vermont Attorney General Bill Sorrell told reporters.

In the meantime, the Feds assigned a new caretaker for Jay Peak and Q Burke Resorts. Those destinations are expected to stay open without big job losses, Shumlin said.

However, Shumlin said the biotech plant and downtown Newport development plans are likely to simply die.

The former leaders of the ski mountains did not respond to requests for comment, but in the court filing, Vermont financial regulators quoted Quiros as saying "no wrongdoing has occurred," because some of his projects were completed, referring to what he described as tangible hotel development at Jay Peak.

However, the authors of the suit dismissed Quiros' claim as just another of his alleged deceptions, writing, "the fact that construction has occurred on some of the projects does not negate Quiros' misappropriation of tens of millions of dollars of investor funds for his personal enrichment, the misuse of significant sums of investor funds for purposes that were never disclosed to investors, or the approximately $60 million construction budget gap that exists as a result of the misuse and misappropriation of funds."

Sen. Patrick Leahy, D-Vt., has supported the EB-5 program for its potential to generate significant investment and create jobs in rural areas, but Thursday said there is "no question the program is in dire need of reform."

Leahy said he will continue to work to convince Congress to enact reforms of EB-5 to improve it, while working to stamp out the potential for fraud and abuse.

Regarding the alleged misuse of investor money by Stenger and Quiros, Leahy said in a statement, "I'm shocked and saddened by what state and federal investigators have found. I'm especially heartbroken for the people of the Northeast Kingdom, whose high hopes for these projects have been dealt a harsh blow. My thoughts are with the many families impacted by this. It is a good sign that both the federally appointed receiver and the state are doing what they can to keep these businesses open and to keep these Vermonters employed. I am also aware that hundreds of investors who believed in these projects now do not know if they will see their money or any immigration benefits. It is a terrible situation all around."

To read the civil complaint filed against Stenger and Quiros by the state of Vermont in Washington County Superior Court, click here.